In a bid to become one of the pioneering layer-1 blockchains to capture maximal extractable value (MEV) at the protocol level, Flare has unveiled a comprehensive governance proposal. This innovative approach would redirect MEV away from a select group of specialized actors who currently reap the benefits of transaction ordering across major chains.
Instead, the value would be channeled into the protocol's token economics, marking a significant shift in the blockchain landscape. MEV refers to the revenue generated by block builders through the strategic reordering, insertion, or censorship of transactions within a block. On most blockchains, this value is siphoned off by external searchers and builders, effectively imposing a hidden tax on ordinary users through tactics like front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues are substantial, ranging from tens of millions on networks like Arbitrum to upwards of $500 million on Ethereum and as much as $1 billion on Solana. Flare's proposal is multifaceted, comprising three distinct stages. Initially, block building would transition from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place in case the builder becomes unavailable.
The second stage would see block building migrate to Flare Confidential Compute, rendering the process publicly auditable. The final stage would consolidate the builder and proposer into a single entity, reassigning existing validators to a verification role.
The proposal also introduces FIRE, the Flare Income Reinvestment Entity, tasked with collecting revenue from various protocol sources, including attestation fees, FAsset and Smart Account fees, confidential compute fees, and captured MEV. FIRE's primary objective is to decrease the FLR token supply through open-market buybacks and burns.
Upon approval, several key changes would be implemented immediately. The annual FLR inflation rate would be reduced to 3% from 5%, with the hard cap lowered to 3 billion tokens per year from 5 billion.
A significant increase to the base gas fee, from 60 gwei to 1,200 gwei, would result in an estimated annual FLR burn of 300 million, up from roughly 7.5 million, at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. Flare's roots in the XRP ecosystem run deep, having conducted an airdrop to XRP holders in 2023 to distribute its initial token supply.
Its FAssets system has successfully produced over 150 million FXRP, providing smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain space.